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Tale of Two Estate Planning Stories


During the time that I have been representing people doing estate planning, handling probate estates and other estate administration and similar matters, I have come across many, many stories, both good and bad, of examples what to do and what not to do in regard to estate planning.  Most of the bad stories involve not doing enough, including not planning at all.  In this article, I recount the tale of two estate planning stories.

Recently I was speaking with a financial adviser who shared with me a couple of stories from his recent experience.  He was involved in two different estates for two clients of his.  The one estate, which I will call the “Simple Estate”, involved only 5 stocks, individually held, and the decedent (the person who died) had only 2 children.  The other estate, which I will call the “Complex Estate”, involved 18 stocks and 5 children scattered around the country.

By naming these estates Simple and Complex, you might guess that the estate administration for the simple one was simple, and the estate administration for the complex one was complex, but you would be wrong. The decedent of the Simple Estate did a Will.  Most people who do estate planning only do a Will, so there is nothing unusual about that.  I am fond of saying that a good philosophy to live by is “to keep things simple unless there is a reason to complicate them”. With estate planning, sometimes a little more complexity will actually make things simpler in the end.

Doing just a Will is pretty simple.  Once the Will is signed, most people stop thinking about their estate planning until some life change causes them to consider it again.  Sometimes people do not rethink their estate planning at all when life changes occur or time goes by.  In those instances, the failure to rethink the estate planning may add complication on top of complication, for what should have been a simple estate…, but I digress.

The Simple Estate with the Will is still going on after 18 months of administration.  The 5 stocks represented 5 shares in 5 different companies (like Coca Cola, IBM, etc.). The Executor of the Estate had to deal with each individual company, and each individual company had their own protocol that was different than the others.  The differences meant more work for the Executor to liquidate the stocks, but this is not the primary reason for the complications.

The Estate had to go through the Probate process. A Will does not avoid the probate process; a Will directs the probate process.

Even with the simplest of probate estates that are straightforward, with no creditor issues, family issues, or other complications, takes about 12 months (at least in Illinois).  A main reason that it takes so long is the mandatory 6-month claims period must go by during the Estate administration process.  It takes two or three months to get the probate estate ready to be filed, to receive the Letters of Office, to send out the mailing notices to all of the heirs, legatees and creditors, and to publish in the paper once a week for three successive weeks to begin the 6-month claims that must run after notices go out to heirs, legatees and creditors and are published in the newspaper.  On the front end, it usually takes two or three months to gather information and get the probate estate started (though it need not take that long); on the back end, it takes two or three more months to prepare the final documentation, including a final inventory, final accounting, receipts on distribution, notices and other things, make all the distributions and prepare the final documentation for filing to close the estate.

At this point, you have likely figured out that the Complex Estate was actually simpler to handle.  The more complex estate planning made the estate administration a breeze. The financial planner who related these two stories told me the difference in time from when he was first contacted to when the stock was distributed was 18+ months compared to just 7 days! The reasons are actually simple.

One reason for the quicker transfer of the stock was that the stock, in the 18 different companies, was held by one administrator (in this case Edward Jones), rather than directly with each of the 18 companies.  The primary reason why the process went so quickly, however was because the assets were held in a Trust.

A Trust for both spouses (or two Trusts, one for each spouse) is more complicated to set up, and will cost a little more than just a Will, but an estate that is in trust will not go through the probate process and, therefore, avoid everything involved in a probate proceeding.

With a trust, the successor trustee simply steps into place when the initial trustee (the person who did the estate planning) dies.  The successor trustee carries on the instructions in the Trust without the need for filing any papers or petitions, without the need for attorneys or the court, without the need for any notices or waiting period and without delay.

Using a Trust as the primary vehicle of estate planning, of course, is a bit more involved at the front end.  Once the Trust is established, the assets of the Trustor (the person who establishes the Trust) must be transferred into the Trust.  This is not a difficult process, but it takes a little more work than simply doing a Will and walking away.  It is also a bit more costly, but the additional costs involved are not nearly the price that will be paid when an estate goes through the Probate process.

If you are considering your estate planning, or reassessing the estate planning that you have, consider the differences between a simple estate plan and a more complex estate plan, and the benefits (and cost savings) that flow from something more than just a simple estate plan.  If you want to know more about the differences between Wills and Trusts for estate planning, you may find other articles at the Drendel & Jansons Estate Planning Blog as well as resources on the Drendel & Jansons Resource Page.

Kevin G. Drendel
Drendel & Jansons Law Group
111 Flinn Street
Batavia, IL 60510
630-406-6179 fax
[email protected]